What Do I Need to Know About Salary Sacrifice?

There’s no denying that electric vehicles are the future of motoring, and at Fleet Evolution, we’re dedicated to helping people drive greener cars. An easy way to make EVs more affordable and accessible is by offering salary sacrifice schemes in workplaces. Whether you run a small team or a big organisation, salary sacrifice schemes are the key to a happy workforce, happy planet and happy employer. So, if you’re asking, “what do I need to know about salary sacrifice?” you’ve come to the right place.

What is Salary Sacrifice?

Salary sacrifice schemes are similar to cycle to work schemes, where employees get rewarded for choosing eco-friendly methods of travel. These schemes allow employees to exchange a small percentage of their gross salary in return for a fully maintained electric car.

How does Salary Sacrifice work?

A salary sacrifice scheme works by employees choosing a car, provided by the employer. The employee then sacrifices part of their GROSS salary to cover the cost of this vehicle. Employees benefit by having a fully maintained car at a fraction of the cost they’d usually pay. With this agreement, all costs excluding the fuel are covered. Before making choices, you should double-check that you can get a salary sacrifice car and understand what you should be looking for in a salary sacrifice car scheme.

What are the Benefits to the Employee?

There are many benefits to the employee, which you can read more about in our employee zone, but some of the most important ones are:

• Choice of a number of electric vehicles.
• No deposit or credit check.
• Save on tax and NI (salary sacrifice payments deducted from pre-tax salary).
• All of the perks of having a company car.

What are the Benefits to the Employer?

Encouraging employees to drive electric vehicles also results in many benefits to the employer. You can read more about these benefits in our employer zone. Here are some of the most important ones:

• Helps attract new employees and retain current staff.
• Save on employer’s National Insurance.
• Reflects positively on your business for being eco-friendly and employee-focussed.

What are the Disadvantages of Salary Sacrifice?

Although a salary sacrifice scheme is ultimately a good thing, there are a few potential disadvantages you may want to consider:

• You’ll be reducing your gross salary if you take on a car.
• There could be an impact on your pension contributions or benefits.
• You will pay tax on the benefit.
• You’ll be committing to a 2, 3, or 4-year deal.

Is Salary Sacrifice a Good Idea?

We think that salary sacrifice schemes are a great idea that benefits both employees and employers. It helps out the planet as well, win-win! We understand everyone’s situation is different, so it’s crucial to weigh up the pros and cons before committing to a decision.

How can I sign up for a Salary Sacrifice Scheme?

No salary sacrifice scheme where you work? Talk to your manager and see if they will start offering it, it’s free for them! Here’s why employers should introduce salary sacrifice schemes.

Hopefully, we’ve answered the question of “what do I need to know about salary sacrifice”. If you’re an employer looking to set up the scheme for your employees, you’re only a few clicks away! Complete your salary sacrifice agreement with us today or talk to the Fleet Evolution team on 0300 302 0626!